ANNUAL REPORT
2014
Annual Report 2014
The Urban Institute, 2100 M Street, NW, Washington, DC 20037
The Brookings Institution, 1775 Massachusetts Ave., NW, Washington, DC 20036
Letter from the Directors
After the presidential election in 2012 and the fiscal cliff
debates that extended into 2013, it would have been
reasonable to expect 2014 to be a relatively quiet year
for tax policy. But tax policy never sleeps. A surprise
international bestseller by a French economist generated
an intense debate over income inequality and the tax
system’s role in addressing it. The chairman of the House
tax-writing committee released his long-awaited plan for
broad-based tax reform. Corporate inversions became
front-page news. And, with the recovery of the economy,
state and local governments seem to be on somewhat
divergent paths—with some ensuring they have funding
to maintain services, including expanded health care, and
others cutting taxes and chasing mythic growth while
rejecting federal aid.
The Tax Policy Center addressed all of these issues,
in addition to making major investments in our tax
models, expanding our capacity to analyze business and
environmental taxes, and developing new communication
tools. This report details our activities in these and other
areas in 2014. Here are some highlights:
January marked the 50th anniversary of President Johnson’s
declaration of a war on poverty. We hosted an event that
highlighted the remarkable evolution of the tax system as an
essential antipoverty tool and examined tax subsidies aimed
at providing affordable housing and encouraging investment
in distressed neighborhoods. The event featured the White
House Council of Economic Advisers chair, Jason Furman, as
its keynote speaker.
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In February, former House Ways and Means Committee
chair Dave Camp (R-MI) proposed a remarkably
comprehensive tax reform plan. We examined key aspects
of this reform in 15 blog posts and explored the economic
and distributional effects in depth in a later study.
In April, TPC hosted Paris School of Economics professor
Thomas Piketty who spoke about his bestseller, Capital in
the Twenty-First Century, followed by a panel discussion
on economic inequality and the tax system’s role in
addressing it.
In September, TPC hosted a keynote address by US secretary
of treasury, Jacob J. Lew, on business tax reform and an
event examining the controversial practice of corporate tax
inversions—moving an American company’s headquarters
overseas to reduce its US tax bill.
Tax Policy Center staff also made significant contributions
to the work of the DC Tax Revision Commission, which
developed a tax reform plan that was widely lauded across
the political spectrum.
Over the course of the year, we worked on a major overhaul
of our state-of-the art microsimulation tax model—a timeconsuming process that will be completed in 2015.
We developed innovative ways to communicate information
effectively to both general and expert audiences. We
expanded our reach on social media and gave our website
a facelift in advance of a complete redesign, due to launch
in 2015. In early 2014, we launched an email newsletter,
the Daily Deduction, which summarizes tax and budget
stories from around the web, highlights key events
(such as the introduction of new legislative proposals),
and offers engaging and accessible explanations of TPC
estimates, analysis, and commentary. We updated our
online tax calculators to reflect changes in the law as well
as major reform options. And in the run-up to “tax day,” we
developed interactive tax forms that explained major tax
provisions, how they came about, how they affect revenue
and the distribution of tax burdens, and what reforms might
improve them.
Leonard Burman Eric Toder
With the support of our generous funders, we have
big plans for 2015 and beyond, including expanding
our research and outreach activities on climate tax
policy, international taxation, and tax compliance and
administration. We are developing new educational tools
to help citizens evaluate 2016 presidential candidates’
tax plans. And we are developing additional resources
so that when Congress and the president are ready to
move forward on tax reform, the resources will be readily
available to policymakers and the public.
As always, thank you for your interest and support.
William Gale
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A b o u t t h e Ta x P o l i c y C e n t e r
Since opening its doors in 2002 as a joint venture between
the Urban Institute and the Brookings Institution, the
Tax Policy Center has filled a critical need for effective,
nonpartisan analysis of tax policy. Our objective, timely,
and accessible information helps policymakers, journalists,
academics, and taxpayers identify and evaluate current
and emerging tax policy options. We believe that better
information, rigorous analysis, and fresh ideas injected at
key points in the policy debate can forestall bad policies
and reinforce good ones. We focus our efforts on four
overarching areas:
Fair, simple, and efficient taxation. Virtually everyone
agrees that taxes should be fair, simple, and efficient.
Disagreement arises over how to define these objectives and
strike the right balance when they compete. TPC quantifies
the trade-offs among policy proposals and develops ideas
upon which would-be reformers can draw.
Social policy in the tax code. Taxes are a critical part of
the social safety net. The earned income tax credit (EITC) is
now the largest cash transfer program affecting workingage Americans. Scores of other tax credits, deductions,
and exclusions aim to promote housing, health, education,
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childcare, and other social welfare policy objectives. The Tax
Policy Center evaluates the design and effectiveness of tax
safety net programs and other spending through the tax
code and, where appropriate, suggests improvements.
Long-term implications of tax and budget choices.
If current policies continue, the nation’s long-run fiscal
prospects are bleak, primarily because of spending pressures
created by an aging population and rising health care costs.
The Tax Policy Center examines the implications of current
policies and alternative tax changes that could help close the
budget gap.
State tax issues. Many Americans pay more state and
local tax than federal income tax, and states, like the
federal government, often use the tax system to encourage
business development and help low-income families.
As part of the Urban Institute’s State and Local Finance
Initiative (SLFI), TPC experts analyze the interactions
among federal, state, and local tax policies and evaluate
the fairness and efficiency of revenue systems at all levels
of government. In addition, SLFI experts connect tax and
spending issues that state and local governments face to
better understand how they might be resolved.
“Unlike the other agencies I’ve discussed thus far, the TPC is a private organization affiliated with the
Brookings Institution and the Urban Institute. Its output is similar to that of the [Joint Committee
on Taxation] JTC and [the Office of Tax Analysis] OTA. The big difference is that it produces revenue
estimates and distribution tables for a wide variety of proposals and not just those getting a push by
the White House or the tax-writing committees.”
Bruce Bartlett, “Where to Find Good Policy Analysis, Part 2,” The Fiscal Times, March 20, 2014.
Secretary Jacob Lew, of the Treasury Department,
addresses an overflow audience at a TPC event
in September.
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Productivity at a Glance, 2014
62 discussion papers, research reports, policy briefs, articles, and commentaries
Research and Testimony
5 testimonies before Congress
329 TaxVox blog entries
12 public policy symposia
24,267 TaxVox RSS subscribers
Public Outreach
4,972 subscribers to TPC’s newsletter
13,530 Twitter followers
2,547 Facebook likes
Media
Web Site
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More than 1,870 citations in major media articles
1.5 million unique page views
157,561 TaxVox page views
Most Viewed Publications
Taxes and Inequality
by Leonard E. Burman
Corporate Inversions
by Kimberly A. Clausing
The War on Poverty Moves to the Tax Code
by Leonard E. Burman and Elaine Maag
Corporate Income Tax Reform: Dreaming On
by Eric Toder
Description and Analysis of the Camp Tax Reform Plan
by Jim Nunns, Amanda Eng, and Lydia Austin
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Ta x P o l i c y a n d I n e q u a l i t y
The rise in income inequality and its economic and social
implications greatly concerns many Americans. Through
a series of reports and public events, TPC experts played a
critical part in analyzing the issues encompassing income
inequality, poverty, and the role subsidies and preferences in
the tax code play in mitigating some of those issues.
Thomas Piketty gives a synopsis of his bestselling book,
Capital in the Twenty-First Century, at a TPC event in April.
Highlights
Taxes and Inequality, a paper by TPC director Leonard E.
Burman, provides a review of historical trends in economic
inequality and tax policy’s role in reducing it. He documents
the various reasons why income inequality continues to
rise, paying particular attention to the interplay between
progressive federal taxes and regressive state and local taxes.
President’s Council of Economic Advisers, pointed out that,
based on the new supplemental poverty measure, which
includes the direct effect of tax-credits, the tax system now
significantly reduces poverty—a big change from the 1960s
when taxes added to poor families’ burdens.
In “The War on Poverty Moves to the Tax Code,” an article
published by Tax Analysts, Leonard E. Burman and senior
research associate Elaine Maag address tax credits and their
influence on the US poverty level. In 1975, the federal income
tax code joined the “War on Poverty” when Congress created
the EITC. Today, tax credits form some of the largest and most
effective antipoverty programs in the United States.
The Tax Policy Center and the University of Southern
California Gould School of Law cosponsored a conference on
the intersection of income inequality and tax policy. Panels
included leading experts from a range of disciplines, who
discussed four topics: how to measure inequality, how the
tax system creates inequality, tax policy versus fiscal policy,
and the income tax as an antipoverty tool. Senate Finance
Committee chairman Ron Wyden (D-OR) delivered the
keynote address.
The Tax Policy Center hosted an event commemorating the
50th anniversary of President Johnson’s declaration of a war
on poverty. The widely attended event featured University of
Wisconsin–Madison chancellor and former deputy secretary
of commerce Rebecca Blank, who discussed the role of tax
credits in reducing poverty, as well as experts on individual
and business tax incentives targeted at low-income
populations. Luncheon speaker Jason Furman, chair of the
The Tax Policy Center also hosted a popular event featuring
Paris School of Economics professor Thomas Piketty. Piketty
summarized his New York Times bestselling book, Capital in
the Twenty-First Century. TPC director Leonard E. Burman,
Dean Baker of the Center for Economic and Policy Research,
and Kevin Hassett of the American Enterprise Institute
then discussed the role tax policy might play in mitigating
income inequality.
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Fiscal Outlook
The Tax Policy Center played a leading role in documenting
and analyzing ways to address the fiscal challenges facing
the United States. Our staff published reports discussing
alternative ways to help reduce the debt over the long term
without derailing the fragile economic recovery or placing
undue burdens on vulnerable populations.
Highlights
In Effect of Income Tax Changes on Economic Growth, TPC
codirector William G. Gale and Dartmouth professor of
economics Andrew Samwick examine how changes to the
individual income tax affect long-term economic growth.
The findings suggest that not all tax changes will have the
same impact on growth. Reforms that improve incentives,
reduce existing subsidies, and avoid windfall gains and
deficit financing will have more auspicious effects on
the long-term size of the economy, but they may also
exacerbate trade-offs between equity and efficiency.
Evaluating Broad-Based Approaches for Limiting Tax
Expenditures provides an evaluation of six options to
achieve across-the-board reductions to a group of major
exclusions and deductions in the income tax. The TPC
authors, Eric Toder, Joseph Rosenberg, and Amanda
Eng, address issues of design, implementation, and
administration, as well as the distributional and incentive
effects of the various options.
William G. Gale and University of California, Berkeley
professor of economics and law Alan Auerbach assert, in
their article “Forgotten But Not Gone: The Long-Term Fiscal
Imbalance,” that, over the past few years, the long-term
fiscal situation in the United States has somewhat improved
and short-term deficits have fallen. Perhaps as a result,
policymakers have largely turned their attention away
from dealing with fiscal issues. They argue that though the
fiscal problem may well be forgotten, it is not gone. Current
debt/gross domestic product ratios are the highest in US
history except for a few years surrounding World War II. The
ratio is projected to rise more over the next decade, even
if everything goes right from an economic and political
viewpoint. Reasonable projections indicate continuing
growth in the ratio will reach unsustainable levels over the
long term. Even if boosting the economy is a short-run
priority, policymakers should also be offering concrete plans
for an eventual, substantial fiscal consolidation.
TPC experts analyzed key tax provisions in President Obama’s
2015 budget. Analysis of Specific Tax Provisions in President
Obama’s FY2015 Budget focuses on the budget’s effects
on economic incentives, revenues, the distribution of tax
burdens, and complexity.
9
This TPC chart reprinted in Washington Post’s Wonkblog
shows how many people at different levels of income would
pay more, less, or the same amount in taxes.
FIGURE 1
Percentage of Tax Units with Tax Increase and Tax Decrease Under the Lee Proposal
by Expanded Cash Income Percentile, 2015
Tax Increase
No Tax Change
Tax Decrease
PERCENTAGE OF TAX UNITS IN INCOME CLASS
100%
80%
60%
40%
20%
0%
10
Lowest Second Middle Fourth
Top
EXPANDED CASH INCOME QUINTILE
80-90 90-95 95-99 Top 1 Top 0.1
EXPANDED CASH INCOME PERCENTILE
Ta x R e f o r m , F a i r n e s s , a n d E f f i c i e n c y
Many experts acknowledge that the US tax system
is complex, inefficient, and in urgent need of reform.
Throughout 2014, TPC explained the issues, options,
and trade-offs involved in major tax reform and hosted
discussions about its implications for economic fairness.
Highlights
Former Ways and Means Committee chair Dave Camp (R-MI)
produced the most comprehensive tax reform plan, the Tax
Reform Act of 2014, to come out of Congress in a generation.
Senior fellow Jim Nunns and research assistants Amanda
Eng and Lydia Austin describe the major provisions of the
act in Description and Analysis of the Camp Tax Reform Plan.
Nunns, Eng, and Austin also estimate the plan’s effects on
revenue and the distribution of tax burdens, economic
incentives, and compliance costs.
In her brief, “Corporate Inversions,” Reed College professor
Kimberly A. Clausing focuses on the recent spate of
corporate inversions, in which US multinational corporations
have combined with foreign companies and located their
new corporate structures outside the United States in
countries with low corporate taxes. Clausing explains what
inversions are and how they work, how the US tax system
encourages them, and their implications for the corporate
tax base. Clausing also highlights the kinds of reforms that
might stem the tide.
In “How to Stop Corporations from Fleeing US Tax Laws” in
the Wall Street Journal’s MarketWatch, TPC codirector Eric
Toder explains why corporations expatriate from the United
States. He concludes that provisions to stop the current
wave of such moves will only provide temporary relief unless
Congress addresses fundamental flaws in the way we tax
corporate income; Toder also recommends two options for
fundamental reform.
Again in the Wall Street Journal’s MarketWatch, in “Corporate
Tax Is Broken and Needs Major Surgery,” Eric Toder and
American Enterprise Institute economist Alan D. Viard argue
that recent highly publicized tax avoidance transactions by
US corporations reflect basic flaws in how we tax the income
of multinational corporations and that proposed reforms
that maintain current definitions of corporate residence and
A TPC panel discusses business
tax reform in September.
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source will not fix the underlying problems. The authors
propose two fundamental structural reforms: seeking
international agreement on rules for allocating the income
of multinational corporations among countries, or scrapping
the US corporate income tax entirely and replacing it with a
system to tax currency changes in corporate stock value at
ordinary income rates.
Toder and Viard continued their discussion of this issue at
a TPC event cohosted by the American Enterprise Institute,
where they presented a research paper, funded by the
Peter G. Peterson Foundation. Toder and Viard discussed
their two proposed two options for reforming the current
corporate tax system. The first option calls for international
cooperation on the allocation of multinational corporations’
income across countries. The second option would eliminate
the corporate tax altogether and replace it with a tax on
dividends and accrued capital gains at the shareholder
level. Panelist Martin A. Sullivan of Tax Analysts lauded
their work, stating that it should be at the forefront of the
tax reform debate. Sullivan, together with Pam Olson of
PricewaterhouseCoopers, also discussed the challenges
that would need to be addressed, including the difficulty
of achieving international agreement under the first option
and the political backlash that may ensue if the corporate
tax were abolished under the second option. The panelists
noted the potential economic benefits of the two options in
reforming a deeply problematic corporate tax system.
U.S. corporate profits and income taxes
as a percentage of GDP
Slate created this chart using TPC
data in “The Incredible Shrunken
U.S. Corporate Tax” on July 31.
Data: Tax Policy Center and BEA
Income Taxes
Profits
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
0.0%
12
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
2.0%
Ta x a t i o n a n d t h e F a m i l y
A cornerstone of TPC’s work is its analysis of how taxation
affects children, families, and vulnerable populations. The
Tax Policy Center continued its work related to child tax
benefits for families at all income levels.
Highlights
In “State Policy and EITC Expansion for Childless Workers,”
Elaine Maag and research assistant Brian Moore review
President Obama’s proposal to increase the federal EITC
for workers without qualifying children. They find that the
proposal would automatically raise state EITCs in the 23 states
that set their state-level credits for childless workers equal to
a percentage of the federal credit.
In a policy brief entitled “Child-Related Benefits in the
Federal Income Tax,” Elaine Maag examines the substantial
child-related benefits in the federal income tax system,
highlighting the beneficiaries of each major provision
and how much benefit each received. Maag finds that,
in 2013, five major child-related tax benefits—the EITC,
the child tax credit, the child and dependent care credit,
the dependent exemption, and the head of household
filing status—reduced taxes and provided credits totaling
roughly $3,400 per family with children. Nearly all families
benefited, but low- and middle-income families benefited
the most.
In his testimony before the Senate Finance Committee,
Leonard E. Burman outlined some of the challenges facing
the middle class in 2014. Burman also explored policy
options that might help better equip policymakers to meet
The White House Council of Economic
Advisers chair, Jason Furman, addresses
a crowd at a TPC event in January.
those challenges, including improving access to higher
education and job training; consolidating and targeting
education tax subsidies; slowing the growth of spending
on health care; eliminating the carried interest loophole;
encouraging saving by offering automatic contributions
to 401(k)-like accounts for low- and moderate-income
households; and replacing automatic price indexing with
annual indexation adjustments designed to partially
counterbalance changes in the distribution of income on a
revenue-neutral basis.
In New Perspectives on Homeownership Tax Incentives,
former TPC researcher Benjamin H. Harris, Institute
fellow C. Eugene Steuerle, and Amanda Eng, analyze the
economic effects of various reforms to the tax treatment
of housing. They find that the reforms differ from both the
current treatment of housing and most-proposed reforms
(such as Bowles-Simpson); the reforms attempt to reward
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reduce tax revenue by $2.4 trillion over the 2014–23 10-year
budget period and remove roughly 12 million tax units from
the federal income tax rolls in 2014.
homeownership directly, not the buildup of additional
debt.
TPC experts conducted an analysis of Senator Mike Lee’s (RUT) Family Fairness and Opportunity Tax Reform Act (S.1616).
The analysis, Preliminary Analysis of The Family Fairness and
Opportunity Tax Reform Act, estimated that the plan would
Elaine Maag participated in a webinar sponsored by Tax
Credits for Working Families on the president’s proposed
expansion to the EITC for workers without qualifying children.
The child care credit subsidizes child care for wealthy families,
but it fails to provide any benefit to very low income families.
This chart appeared in a Vox article on June 3.
Child Care Credit, Single Parent with Two Children
2012 Law
$2,000
$1,800
$1,600
Value of Benefit
$1,400
$1,200
$1,000
$800
$600
$400
$200
$0
$0
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
Earnings
Source: Author’s Calculations. Assume all income is from earnings and both children qualify for all benefits. Maag, Rennane, Steuerle, 2011.
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State and Local Finances
The State and Local Finance Initiative (SLFI), housed within
the Tax Policy Center, is a clearinghouse for information on
how state and local governments raise revenue and deliver
public goods and services. It equips policymakers, citizens,
researchers, and the media with the tools that they need to
navigate competing policy options and understand difficult
tradeoffs, whether in recession or recovery.
Highlights
The State and Local Finance Initiative (SLFI) updated and
improved the State and Local Finance Data Query System
(DQS). The system contains detailed revenue, expenditure,
and debt variables for the United States, each of the 50
states, and the District of Columbia. SLFI updated the DQS to
include data through 2012 from the Census of Governments
on revenues and expenditures and made it possible for
users to download large amounts of data. The DQS was an
especially helpful resource for researchers when the federal
government shut down and the Census of Governments was
temporarily unavailable on the official website.
and commission chair Anthony A. Williams. The commission’s
Final Report is being widely used as a resource by other local
jurisdictions looking to reform their own tax codes.
SLFI informed and provided advice to state and local
governments and practitioners, researchers, the media,
policymakers, and the public on state and local finances.
In addition to updating tax and revenue information, SLFI
staff highlighted state antipoverty programs, public-sector
retirement, and Medicaid expansion through their research
products. They also updated the website to include statespecific economic summaries to complement the State
Economic Monitor. The Monitor provides a quarterly summary
of economic and finance information for all 50 states and
the District of Columbia. The SLFI team’s work in this area has
increased their visibility, and, in particular, their work on the
The Washington Post nominated this State and Local Finance
Initiative map as one of its nine favorite tax maps in 2014.
The initiative and TPC staff played an active role in and made
significant contributions to the work of the DC Tax Revision
Commission, which helped guide DC’s recently enacted tax
reform. Senior fellow and head of SLFI Kim S. Rueben, was
a commissioner; senior research associate Norton Francis
prepared a paper on business taxes in DC and testified
before the commission; and research associate Richard
Auxier and senior fellow Steven Rosenthal staffed the
commission. The Tax Policy Center also hosted a conference
about the commission report, headlined by former DC mayor
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interdependence of tax policy has been the subject of Senate
Finance hearings and Congressional staff discussions around
tax reform. Kim S. Rueben also testified before the California
State Senate’s Committee on Budget and Fiscal Review about
the possible introduction of a budget reserve fund and other
approaches to handling the state’s tax volatility. The initiative’s
researchers also made numerous media appearances and
spoke to the press about the fiscal health of state and
local governments, the relationship between the levels of
government, and specific states’ tax and economic issues.
The SLFI team began expanding its state-level modeling
capacity and developed a new state tax model to enable
state-level distributional analysis. They have a complete set
of state income tax calculators and have been testing these
models with the TPC database.
The Washington Post reproduced this TPC map in GovBeat
on October 17. It originally appeared in the State and Local
Finance Initiative’s October issue of the State Economic Monitor.
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Communications and Outreach
While TPC has become a go-to source of tax information for
the media, policymakers, and their staffs, we continue to
redouble our efforts to communicate more effectively with
our core audience and find new ways to reach the public.
Highlights
TPC built and improved its tax calculators—a major attraction
to TPC’s website. TPC launched a new Affordable Care Act Tax
Penalty Calculator that allows users to estimate the potential
penalty for individuals and married couples who do not have
health insurance coverage required by the Affordable Care
Act. It helped dispel the inaccurate suggestion in many online
and print articles that the new penalty would be just $95 and
prompted a number of news stories that helped correct the
record—and was widely cited in the media. The Tax Policy
Center updated its Net Income Change Calculator, a tool that
allows the public to examine how changes in wages or hours
worked would affect low-income families’ net income (or the
value of after-tax income plus federal benefits).
TPC launched its online newsletter, Daily Deduction, written
by TPC consultant Renu Zaretsky and edited by resident
“Cool tool: Tax Policy Center’s interactive
1040 tax return shows how many people
paid what on each line.”
Jason Zweig, The Wall Street Journal via Twitter
“ The Tax Policy Center has posted a
fascinating interactive tax form online…The
result is a treasure trove of information.”
Laura Saunders, The Wall Street Journal
fellow Howard Gleckman. The popular daily newsletter
highlights TPC analysis, summarizes tax and budget
stories from around the web, highlights key events (such
as congressional consideration of legislation), and offers
engaging and accessible explanations of TPC estimates,
analysis, and commentary.
The Tax Policy Center hosted 14 public events, which
attracted a great deal of attention in 2014. These events,
featuring Treasury Secretary Jacob Lew and French
economist Thomas Piketty, among others, drew more than
1,000 attendees. We began live tweeting events during
the year, which increased our reach and allowed broader
audience participation. For example, during our event with
Treasury Secretary Jacob Lew, we had more than 280 social
interactions with influential participants, including journalists,
policymakers, and attendees. We webcasted all our events
to give viewers outside of the DC area live access and the
opportunity to ask questions via email. Our event video
archives have attracted thousands of viewers.
TaxVox, the Tax Policy Center blog, expanded its reach.
TaxVox provides timely and engaging commentary and
analysis of tax and fiscal policy issues. Its readership
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“ This Tax Policy Center interactive 1040 tax
form is fantastic and a real public service.”
Jake Grovum, Stateline, Pew Charitable Trusts via
Twitter
continues to grow as more policymakers, members of the
press, analysts, and interested lay readers become aware of
Howard Gleckman’s (and other senior TPC experts) smart
and accessible analysis. TaxVox had more than 24,000 direct
subscribers and received more than 157,500 page views
in 2014. TaxVox reached many additional readers through
major news organizations, including The Christian Science
Monitor (csmonitor.com) and Forbes.com, which reposts
nearly all TaxVox articles.
TPC expanded its reach through social networking and grew
its social media audience. Our Twitter and Facebook accounts
have become go-to resources for tax news and analysis, and
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Secretary Jacob Lew addresses a
crowd at a TPC event in September.
help us promote our own materials. In 2014, we increased
our Twitter followers by over 2,000 and began connecting to
our audience through new social platforms like LinkedIn and
Google Plus.
Microsimulation Model
The Tax Policy Center has built and employed a sophisticated
microsimulation model of the tax system. The model allows
TPC researchers to examine the distributional implications
of the current tax system and to estimate the revenue,
distributional, and incentive effects of tax policy proposals.
Highlights
We continued to analyze tax proposals and produced
more than 100 revenue and distribution tables. These
efforts included detailed analysis showing the revenue and
distributional effects of the administration’s fiscal year 2015
budget proposal and of tax plans put forward by House Ways
and Means Committee chair Dave Camp (R-MI), Senator Mike
Lee (R-UT), and Senator Jeanne Shaheen (D-NH).
In early 2014, TPC began updating and overshauling its
microsimulation tax model of the federal tax system. We
updated the model to reflect the most recent publicly
available individual income tax return data and published
tabulations. We statistically matched data from the March
2012 Current Population Survey produced by the Census
Bureau. The statistical match adds richer demographic data
and produces a sample of the “nonfiler” population—the
households with income too low to require them to file an
individual income tax return. As a result, the matched dataset
is representative of the entire US population and it will serve
as the primary building block of the new version of our tax
model to be completed in early 2015.
The Tax Policy Center expanded the tax model’s education
module to incorporate the latest individual student
“We all are the beneficiaries of the perspicacity
of the authors and others over the years at
the Tax Policy Center in developing their
microsimulation individual tax model.”
Edward Kleinbard, Pathways to Fiscal Reform in the
United States
information from the US Department of Education, including
detailed demographic and financial characteristics of
post-secondary students from the 2011–12 National
Postsecondary Student Aid Study. Our experts used those
data to impute student status, student characteristics such as
year in school or enrollment intensity, and cost of attendance
onto the tax model database. We calibrated the model so
that simulations of number of recipients and average benefit
size match actual Department of Education and Internal
Revenue Service totals by income class for Pell Grants and
education tax credits.
We also expanded our state-level modeling capacity, adding
the capability to simulate federal income taxes by state,
addressing an important need as there are few existing
resources for tax policy analysis at the state level. TPC experts
can now examine which states fare better than others under
tax reform proposals, as well as examine distributional
impacts of policy changes within each state. To do so, we
developed an alternative set of weights that can be used
to make our national tax model database representative
of any state. We impute the state weights such that
tabulations from our tax model database match published
Internal Revenue Service tabulations of an extensive set of
variables by income class including components of income,
exemptions, and deductions. This capacity will be integrated
to use our new and expanded sample information.
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Support
Contributions to TPC help keep our mission intact and ensure excellence and innovation in our work. We are funded largely
through grants and contributions and could not exist without your help. TPC recognizes with immense gratitude all those who
supported us.
The Annie E. Casey Foundation
Bill & Melinda Gates Foundation
Bipartisan Policy Center
Center for Law and Social Policy
College Board
Committee for a Responsible Federal Budget
Charles Stewart Mott Foundation
Center for American Progress
DC Tax Revision Commission
Energy Foundation
Ewing Marion Kauffman Foundation
Ford Foundation
HCM Strategists, LLC
H&R Block
John D. and Catherine T. MacArthur Foundation
Laura and John Arnold Foundation
National Academy of Sciences
National Low Income Housing Coalition
New America Foundation
Peter G. Peterson Foundation
The Popplestone Foundation
Price Family Charitable Fund
Stoneman Family Foundation
A number of foundations and individual donors,
some of whom wish to remain anonymous
The Urban Institute and the Brookings Institution are both 501(c) (3) nonprofit organizations, which means your gifts are tax
deductible. By supporting the Center, you can help inform the debate about America’s fiscal future.
If you would like to support the Tax Policy Center, visit us at
http://taxpolicycenter.org/aboutus/support.cfm
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The Urban Institute, 2100 M Street, NW, Washington, DC 20037
The Brookings Institution, 1775 Massachusetts Ave., NW, Washington, DC 20036
http://www.taxpolicycenter.org